PowerPoint PresentationJohn Crane Investor Day, New York – June 2011 | 1www.smiths-medical.com © 2011 by Smiths Medical: Proprietary Data
John Crane
New York
This document contains certain statements that are forward-looking
statements. They appear in a number of places throughout this document
and include statements regarding our intentions, beliefs or current
expectations and those of our officers, directors and employees
concerning, amongst other things, our results of operations, financial
condition, liquidity, prospects, growth, strategies and the business we
operate. By their nature, these statements involve uncertainty since future
events and circumstances can cause results and developments to differ
materially from those anticipated. The forward-looking statements reflect
knowledge and information available at the date of preparation of this
document and unless otherwise required by applicable law the Company
undertakes no obligation to update or revise these forward-looking
statements. Nothing in this document should be construed as a profit
forecast. The Company and its directors accept no liability to third parties
in respect of this document save as would arise under English law.
John Crane Investor Day, New York – June 2011 | 3
John Crane
• A global premier provider of engineered products and value added services for
the process and energy services industries focused on rotating equipment and
artificial lift technologies
• Services a global installed base delivering expertise using 239 sales and
service centres in 51 countries - roughly 2/3 of sales are directly with end users
John Crane Investor Day, New York – June 2011 | 4
Relationships & geographical coverage to leverage expanded product offering
Strong cash generation
Resilient business with high exposure to global aftermarket service markets
Strong brand in growth markets with high barriers to entry
Expertise in key component design and selection
Opportunities to create value, including acquisitions
John Crane - An Attractive Investment Case
John Crane growth range*: sales 6 to 8%; margins 17 to 22%
*Average annual organic growth over the medium term at constant currency
John Crane Investor Day, New York – June 2011 | 5
End ProductTypical EquipmentProduct
2010 Sales £786m
• 21 manufacturing sites in
• 6800 employees
First-fit OEM 37%
Oil, gas & petrochemical
John Crane Serves a Wide Range of Blue Chip Customers
First-Fit Supply to Original
John Crane
Crane has increased its
global presence by some
84 sales, service and
2011
Targeted areas of growth for next 5 years: Middle East,
Russia, China, India, Malaysia, South Korea and Australia,
Brazil, Mexico, Argentina, Oman, Kuwait and Indonesia
John Crane Investor Day, New York – June 2011 | 9
John Crane Historical Overview
CAGR (organic growth) 2005 to 2008 = 6.5% Sales ROS
John Crane Investor Day, New York – June 2011 | 10
Global Infrastructure Investments - Key Drivers
Energy Independence
mbpd in 2035
total increase in conventional world liquids
production, and non-OPEC countries add
another 4.8 mbpd
Market Update: Oil Industry
World liquid production 1990-2035*
* Source: History (EIA), Forecasts:
John Crane Opportunities
• Use of CO2 in enhanced oil recovery
• Maximise share of new projects in traditional and expanded products and services
• Maintain and strengthen customers’ relationships
£5bn
John Crane: Oil price has limited impact
Upstream c25% Midstream c15%
• Underlying demand remains strong
Downstream c60%
World natural gas consumption 2007-2035
Market Update: Gas Industry
projections (July 2010), EIA
for the non-OECD region, from Middle East (16
tcf from 2007 to 2035), Africa (7 tcf), and Russia
and the other countries of non-OECD Europe
and Eurasia (6 tcf)
Middle East
population growth, industrialisation,
• Continue to develop Sales and Service network in developing regions
£5bn
World Electricity generation by fuel 2007-2035*
Market Update: Power Industry
*Source: History (EIA), Forecasts: World energy projections (July 2010), EIA
• World net electricity generation increases
by 87%, from 18.8 tkwh in 2007 to 25.0
tkwh in 2020 and 35.2 tkwh in 2035
• Electricity demand growth returns to pre-
recession rates by 2015
power demand. Major expansion in Asia &
Middle East
• John Crane products utilized across all forms of power generation
• Expanded products and services increase exposure
• Coal – investments in CO2 capture projects due to emissions legislation
£5bn
£5bnMarket Update: Chemical Processing Industry
Sources: International Monetary Fund, Updated April-09; Chemical Market
Associates Inc. (CMAI), John Crane Business Intelligence.
• Basic chemical investment gain
Saudi Arabia, Qatar, Iran and UAE)
• Capacity addition in Asia (China, India)
but scaling down in Japan. China to
become the largest chemical producer
by 2015
600
400
200
0
John Crane Opportunities
• Sales and Service network to maximise aftermarket opportunities in developing regions
• Focus on new project opportunities
John Crane Investor Day, New York – June 2011 | 16
John Crane Opportunities
• Utilisation of Sales and Service network in developing regions
Market Update: General Industry
Water • Water infrastructure firms are looking to grow by
double the global GDP rate annually over the next 10 years
Pulp & Paper
• Major expansion in Asia Pacific and limited replacement of ageing western assets
• Constant challenge due to increasing environmental pressures and drive for increase in recycling and reducing pulp requirements
£5bn
John Crane - Technology – Expertise – Global Service
We provide technology
products and value-added
2011 Current Markets Strategic Expansion Potential
John Crane competes in ~10% of the
global process equipment
£5.0bn
~3-5%
Market
Share
~30%
Market
Share
£2.3bn
£5.0bn
Rotating Equipment Business Model - Installed Base Expansion Cycle
Installed base service cycle
Seeds and grows End User installed base
Win Capital Projects
New product lines & technologies
Aftermarket existing rotating equipment
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A Strategic Portfolio of Product & Services
BearingsMechanical Seals & Systems
Couplings Filtration Systems
Rotating Equipment Artificial Lift
Rotating Equipment Technologies and Products
Power Transmission
Production Solutions - Products and Services
FSR & Steel Sales
process with the exception of Casing
• Fiberglass and steel sucker rods
• Tubing and insert pumps
• Automated Prime Mover – APM
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Expanding Markets
• Markets which are losing well pressure
and related output
• Environmental control regulations
• Unique fiberglass rods
than steel
Customer Intimacy is Key John Crane Differentiator
Around The World, Around The Corner
Opportunities to grow share in expanded market
End User CoverageProducts & Technology
Customer Intimacy – Chevron Global Partnership
• Global major in upstream, midstream and downstream production
• Preferred Supplier Alliance with John Crane initially signed in 2002
• John Crane is rated an “Outstanding” supplier by Chevron
• Ensures mutual goals alignment and enhances cooperation
• Relationship opening upgrade opportunities at upstream sites
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Strategy for Value Creation
- Existing, new OEM and End User customers
- Add further services and solutions via organic development and acquisitions
• Continue to expand service center presence in growth markets
- Provide best in class service to the End Users
- Capture service revenues of new installed base
• Leverage restructuring and data systems for margin sustainability
John Crane Investor Day, New York – June 2011 | 27
Investment in New Product Development
• CO2 capture
• High duty coupling test capabilities
• Advanced seal face materials – Composites
/ Diamond Coatings
• Proprietary analytical tools
Investing in Growth Markets
Restructuring for Better Customer Service and Lower Costs
• Restructured into one global organisation - August 2008
• Regional Sales & Service organisations supporting local customer needs
(Americas / Europe, Middle East, Africa / Asia Pacific)
• Focused business units to leverage recent acquisitions
- Strategic Businesses – Sartorious, Indufil & Orion
- Production Solutions – CDI and Fiberod
• Supported by global functional areas
£m (Jan 2011) Costs Future Benefits Full annualised to date costs to date benefits
John Crane 15 4 19 25
John Crane Investor Day, New York – June 2011 | 30
Acquisitions:
• Leverage existing customer relationships
• Current or potential service revenues
• Bring a new solution set or technology – or – add to existing installed base
Strategy for Value Creation
• Leverage full solution set in global markets
• Capture share of CAPEX spend
• Enhance customer service and expand in growth areas
• Leverage manufacturing capability and global footprint
• Build the business through acquisitions
John Crane: Business Priorities
Sales growth*
17%
19%
21%
23%
Relationships & geographical coverage to leverage expanded product offering
Strong cash generation
Resilient business with high exposure to global aftermarket service markets
Strong brand in growth markets with high barriers to entry
Expertise in key component design and selection
Opportunities to create value, including acquisitions
John Crane - An Attractive Investment Case
John Crane growth range*: sales 6 to 8%; margins 17 to 22%
*Average annual organic growth over the medium term at constant currency
John Crane Investor Day, New York – June 2011 | 33
Questions